“The result is a crisis in European democracy”

On the back of a survey of more than 5,000 people of working age in the UK, Germany, France, Poland and Spain, the Guardian editorialises on the future of the EU.  They’re promising a month long series of articles mapping out the social, political and economic terrain.  From the Guardian editorial

The poll we publish today is taken from a sample of more than 5,000 people of working age in the five leading EU states – Britain, France, Germany, Spain and Poland – and clearly speaks to a crisis in European governance. Only 6% truly trust their government, and just 9% think their politicians are honest, either in power or out of it. Political anxiety is driven by economic pessimism, particularly in France and Germany, the powerhouse of Europe. Almost three-quarters of the French think they will be worse off a decade from now, and so do half of all those polled in Germany, despite its economic recovery.

If Europe is unthinkable without its nations, and those nations are led by a generation of politicians so lacklustre that the only character who stands out, for all the wrong reasons, is Silvio Berlusconi, does that mean that the grand European project is on the wane, however you define it – as a market, a union, a currency, a set of rules, standards and law? Which would now seem more eloquent of the collective mood – the optimism of Beethoven’s Ode to Joy, the EU’s official anthem, or John Cage’s four minutes and 33 seconds of silence?

And in what looks like the first of those articles, Hans-Olaf Henkel offers his solution

If Europe wishes to go back to being a creative community based on competition, it will need a new approach that takes account of the prevailing economic differences that exist.

I suggest splitting the euro into two zones, reflecting the cultural differences in mentality between the countries in question – a “northern zone” centred around Germany, Austria, the Benelux countries and Finland, whose adherence to monetary stability and budgetary stability would be represented by the hard northern euro; and a “southern zone” centred around France, Spain and Italy, whose soft variant of the euro would reflect their free-spending mentality and talent for monetary improvisation. Considering that it suffered primarily from an absurd banking policy rather than a lack of budgetary discipline, Ireland should be part of the north.

The “southern countries” could retain their own competitiveness through a greater tolerance for inflation and corresponding regular devaluations. They would no longer be forced by the European Central Bank into the “straitjacket of Germanic stability phobia”, as the outraged students of Athens and furious unemployed of Madrid perceive it. They could do what they used to do before the introduction of the euro: remain competitive in their own way.

Something, perhaps, for Taoiseach Enda Kenny to contemplate as he considers his next move?  And on the quid pro quo Ireland is being offered in the game, the Irish Times adds an editorial of its own

From an Irish perspective, the continued pressure not only on CCCTB [common consolidated corporate tax base] but the corporate tax rate itself – a line that cannot be crossed – is deeply worrying. Mr Sarkozy made clear that “we’re not asking Ireland to put up their corporate taxes to the European average but to make some effort”. In reality, of course, he is less concerned about Irish revenues than with the drain on French tax revenue which healthy tax competition facilitates.

There are those, however, who are beginning to suggest an Irish fall-back position on the CCCTB – that what may matter more than the principle is the structure of a CCCTB regime, specifically the mechanism for apportionment of taxes raised in states where multinationals book their profits. In truth, with Ireland desperate to see its interest rate cut and likely when new bank stress tests are published to need further assistance in recapitalisation, Mr Kenny has a very weak hand. His trump veto is simply unplayable.

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